UPDATE: Bank Of America, Merrill Seek To Dismiss Holder Suit
(Updates to include comment from Ohio attorney general's office.)
By Chad Bray
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Bank of America Corp. (BAC) and its Merrill Lynch & Co.
unit have asked a federal judge to dismiss consolidated shareholder complaints
over disclosures about the investment bank's financial condition and its plans
to pay billions of dollars in bonuses prior to the completion of their merger
earlier this year.
In separate motions filed late Tuesday, the Charlotte bank and its Merrill
Lynch investment-banking unit asked U.S. District Judge Denise Cote to throw out
several consolidated shareholder lawsuits with Bank of America, saying the
shareholders are trying to improperly "second-guess" the business judgment of
its board's business judgment.
Bank of America Chief Executive Ken Lewis and former Merrill Lynch Chief
Executive John Thain, who are defendants in the cases, also asked that the suits
be dismissed.
"The profound and widespread consequences of the recent financial crisis have
led to opportunistic, hyperbolic hindsight attacks on the disclosures that the
Bank made to investors," Bank of America said.
A spokesman for Ohio Attorney General Richard Cordray, whose office represents
two Ohio pension funds that are among the lead plaintiffs in the case, said the
"lead plaintiff group looks forward to submitting our brief in opposition" to
the motion to dismiss.
The shareholders have claimed that Bank of America and Merrill Lynch
misrepresented that Merrill wouldn't make any discretionary bonus payments
before the merger closed on Jan. 1 and failed to disclose a cap on Merrill
bonuses. They also claim that Bank of America failed to disclose Merrill Lynch
was continuing to incur substantial losses in the fourth quarter.
As part of the merger agreement, Bank of America agreed Merrill Lynch could
pay up to $5.8 billion in bonuses. Merrill Lynch ultimately paid $3.6 billion in
bonuses shortly before the $50 billion merger closed on Jan. 1. The investment
bank reported losses of $27.6 billion in 2008.
Bank of America and the Securities and Exchange Commission agreed earlier this
year to settle similar allegations for $33 million.
U.S. District Jed S. Rakoff in Manhattan, however, rejected the pact in
September, saying he believed the settlement was "neither fair, nor reasonable,
nor adequate" to protect the public interest. He has set a trial in the matter
for March.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
(END) Dow Jones Newswires
11-25-091628ET
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